What is Lease Purchasing?
A Lease Purchase is a process that combines a basic rental lease with an agreement to purchase, or with an option to purchase the property. The Buyer (or Lease-Purchaser) pays to the seller a monthly payment that usually approximates a rental amount or a typical mortgage payment on the
home. A percentage of that payment is typically applied towards the purchase price. At the end of the term, the buyer has the right to purchase the property for the price and terms to which both parties have previously agreed.
Put another way, a lease purchase is essentially a rental agreement combined with a purchase contract with pre-negotiated terms. The buyer leases the property for a specific period of time and then purchases the property before the end of the lease agreement. Sales price, length of rental, rent credits, escrow instructions, etc., are all contained in the agreement.
A lease purchase is a wonderful way to control property without the headaches of banks, mortgages, taxes or immediate loan qualifying. Lease purchasing gives you the right to buy the property, but not the obligation to buy.
Following are just some of the benefits of Lease Purchasing for sellers.
1. Usually top sales price for the property.
2. Better quality tenants.
3. Higher rent than usual for the market area.
4. Non-refundable option consideration.
5. All minor maintenance is delegated to the tenant/buyer.
6. Seller remains on the deed.
7. Seller retains the tax shelter.
8. No fees to pay.